Which of the Following Is True Regarding Float Costs and the Size

question 302

Multiple Choice

Which of the following is true regarding float costs and the size of the optimal cash balance held by a firm?

• A) Float costs impact the optimal cash balance as determined by the BAT model only.
• B) The higher the cash balance, the lower the float cost.
• C) The lower the cash balance the lower the float cost.
• D) Float costs have no impact on the size of the optimal cash balance.
• E) Float costs increase the variance of cash flows per period, and thus the optimal cash balance.

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Definitions:

Bait-and-Switch Advertising

A deceptive marketing strategy where a product is advertised at a low price to lure customers, who are then persuaded to buy a more expensive item.

Product Benefit

The positive outcomes or advantages that a consumer can expect to gain from using a product.

Conventional Marketing

Traditional marketing methods such as print ads, billboards, and broadcasting that do not involve digital channels.

Promotional Messages

Communications designed to inform, persuade, or remind potential customers about a product, service, or brand.